QUESTION 2 Rika Ltd is preparing its financial report for the financial year ending 30 June 2020. The following transactions and events occurred: (a) On 30 June 2020, Rika Ltd has issued 7-year bonds to the public for $1,000,000. The bonds pay 8% interest annually, commencing on 30 June 2021. (b) On 25 August 2020, a flood completely destroyed Rika Ltd's warehouse (carrying amount $900,000), and the inventory stored in the warehouse (carrying amount $600,000). (c) On 23 July 2020, Rika Ltd's internal auditor discovered that Sienna Leo, Rika Ltd's accountant, had fraudulently transferred $1,500,000 of company funds to her personal bank account on 27 June 2020, just before she took indefinite leave for "urgent personal reasons. It is expected that Rika Ltd will not recover any of the missing funds. (d) On 30 June 2020, Rika Ltd's buildings had a carrying amount of $2,500,000 (cost $4,000,000 less accumulated depreciation $1,500,000). On 30 June 2020, the value in use of the buildings was $2,000,000, and the net selling price was $1,800,000. (e) During the 2019-20 financial year, Rika Ltd has invested a considerable amount of money to create and promote its new clothing brand Nasa". On 30 June 2020, an independent expert concluded the brand name could be sold for $1,400,000. REQUIRED Advise Rika Ltd how each of the above transactions and events should be recorded and reported in its financial report for the year ending 30 June 2020, in accordance with the AASB Accounting Standards. In particular. Identify any amounts recorded in the statement of financial position, specifying whether the item is an asset, liability or equity; Identify any amounts recorded in the statement of profit or loss and other comprehensive income, specifying the item is an income, expense, or item of other comprehensive income; Identify any information disclosed in the notes to the financial statements; Or identify that the transaction or event is not included in the financial report, if applicable. (2 + 2 + 2 + 2 + 2 = 10 marks) QUESTION 2 Rika Ltd is preparing its financial report for the financial year ending 30 June 2020. The following transactions and events occurred: (a) On 30 June 2020, Rika Ltd has issued 7-year bonds to the public for $1,000,000. The bonds pay 8% interest annually, commencing on 30 June 2021. (b) On 25 August 2020, a flood completely destroyed Rika Ltd's warehouse (carrying amount $900,000), and the inventory stored in the warehouse (carrying amount $600,000). (c) On 23 July 2020, Rika Ltd's internal auditor discovered that Sienna Leo, Rika Ltd's accountant, had fraudulently transferred $1,500,000 of company funds to her personal bank account on 27 June 2020, just before she took indefinite leave for "urgent personal reasons. It is expected that Rika Ltd will not recover any of the missing funds. (d) On 30 June 2020, Rika Ltd's buildings had a carrying amount of $2,500,000 (cost $4,000,000 less accumulated depreciation $1,500,000). On 30 June 2020, the value in use of the buildings was $2,000,000, and the net selling price was $1,800,000. (e) During the 2019-20 financial year, Rika Ltd has invested a considerable amount of money to create and promote its new clothing brand Nasa". On 30 June 2020, an independent expert concluded the brand name could be sold for $1,400,000. REQUIRED Advise Rika Ltd how each of the above transactions and events should be recorded and reported in its financial report for the year ending 30 June 2020, in accordance with the AASB Accounting Standards. In particular. Identify any amounts recorded in the statement of financial position, specifying whether the item is an asset, liability or equity; Identify any amounts recorded in the statement of profit or loss and other comprehensive income, specifying the item is an income, expense, or item of other comprehensive income; Identify any information disclosed in the notes to the financial statements; Or identify that the transaction or event is not included in the financial report, if applicable. (2 + 2 + 2 + 2 + 2 = 10 marks)
